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North Carolina AG Cracking Down on Health Clubs

The state of North Carolina’s litigation against former Peak Fitness owner Jeff Stec is still ongoing.

That information came in a press release from the office of North Carolina Attorney General Roy Cooper, who recently announced that his state has stepped up its efforts to ensure that health clubs are prepared to refund members whose clubs have closed.

Cooper’s office stated that multiple locations of ZX Fitness, which took the place of the former Peak Fitness clubs after Peak Fitness went into bankruptcy, are still under investigation, along with two Curves for Women clubs in North Carolina. Two other Curves for Women clubs have entered into settlements with the Attorney General’s office requiring their compliance with the law. Three more Curves for Women clubs have complied with the law after receiving a warning letter from the office’s consumer protection division.

In all, the division has recently contacted 28 North Carolina clubs and related businesses, such as dance and martial arts studios, about their compliance with state law. Over the past few years, the division has recovered more than $500,000 for members whose clubs have closed.

“My office hears every week from people whose gym shut down, leaving them in the lurch,” Cooper said in a statement. “Fortunately, North Carolina law requires health clubs to set aside money for refunds, and we want to make sure that businesses are following the law so consumers are protected.”

Under North Carolina law, health clubs, dance studios, martial arts studios and dating services are required to have a bond or letter of credit to cover certain prepaid contracts in case they go out of business and need money to repay consumers. Businesses are required to file sworn statements with the Attorney General’s office about their bonds twice a year.

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